Global Insight Perspective | |
Significance | Under the amended marketing agreement, Schering-Plough will sell anti-inflammatory drug Remicade (infliximab) and its successor golimumab in its territories for 15 years after the first golimumab commercial sale. |
Implications | As partners Schering-Plough and J&J extended their development and co-marketing agreement beyond 2014, the former's JV deal came under fire amid reports that Schering-Plough and Merck have held back liver-damage risk data for cardiovascular drug Vytorin. |
Outlook | The developments on both fronts demonstrate how tightly bound Schering-Plough is to its two separate partners and how safe it remains from potential takeover approaches that would risk unravelling one or both of its JV deals. |
Schering-Plough's Centocor Deal Extended Beyond 2014
Schering-Plough and partner Centocor have extended their development and commercialisation agreement for both Remicade (infliximab), an anti-tumour necrosis factor (anti-TNF) alpha therapy for chronic inflammatory disorders, and for golimumab, Centocor's next-generation, human, anti-TNF alpha therapy, which is currently in Phase III trials. Under the original 1998 pact, Schering-Plough has the rights to market Remicade outside the United States, Japan and certain other Asian markets until 2014. Under the amended agreement it will market Remicade and golimumab in its current marketing territories exclusively for 15 years after the first commercialisation of golimumab. In exchange, Schering-Plough will provide Centocor with a progressively increased share of its profits on the distribution of both products in Schering-Plough's marketing territories between 2010 and 2014, and a fixed share thereafter for the remainder of the term.
Schering-Plough also gains the right to independently develop and market golimumab in the Crohn's-disease indication in its territories, with an option for Centocor to participate. The companies have also agreed to use an autoinjector device developed by Centocor affiliate Cilag GmbH International in the commercialisation of golimumab in their respective territories. Development costs for the device, which will allow patients to self-administer golimumab subcutaneously, will be shared between the partners, and Schering-Plough will make an upfront payment of US$20.5 million in the final quarter of 2007 for rights to the autoinjector device.
As Vytorin Data Come Under Scrutiny
As one of Schering-Plough's pacts flourishes, the shadow of doubt has been cast over the success of its other one—the JV with Merck & Co. Under the JV, the companies sell two drugs: Zetia (ezetimibe) and Vytorin (ezetimibe/simvastatin). Both drugs have done extremely well, with combined sales reaching US$1.3 billion in the third quarter of 2007. However, questions about delays in reporting study data from the important ENHANCE trial of Vytorin have been raised lately, and now there is a new concern. According to a New York Times article, the companies failed to disclose safety data on Zetia from the 2000-2003 period in a timely manner. According to the article, the trials from that period were designed to monitor longer-term safety problems and could pinpoint problems with Zetia's potential liver toxicity that the 12-week-long studies may have failed to detect. According to the report, the unpublished trials were at least one year long, but their full results will not be released until March 2008.
Outlook and Implications
The JV partners could experience significant fallout when the year-long Zetia studies are released in March. Assuming there is substantial evidence of liver toxicity, Zetia's sales could suffer a downward turn. Vytorin, which contains the Zetia active ingredient ezetimibe in addition to off-patent statin simvastatin is also likely to be affected. Importantly, Merck and Schering-Plough could face product liability litigation in the United States if it is evident that they failed to publish risk data as soon as they were aware of significant risks.
The safety challenges—if confirmed when the data are released in March—could bind Schering-Plough and Merck even closer together as they share the risk of future damage control and litigation together. The JV ties are already strong and act as a poison pill for any potential rivals planning to take over Schering-Plough. The other main pact the company has, with J&J's Centocor unit, acts as a second poison pill making potential acquirers turn tail and flee. This second pact has now been expanded far beyond 2014—with 15 years from first marketing of golimumab the pact is now unlikely to expire before 2014, assuming 2008 filing and 2009 approval of golimumab. The poison-pill clauses are so strong that it would be unprofitable even for Schering-Plough's two partners to take over the company as each would be forfeiting the benefits of the marketing pact with the other.